GM incentives: Show of panic -- or strength?

DETROIT -- News last week of General Motors' second big sales promotion in as many months -- a supplier-pricing-for-all event across the Chevrolet, Buick and GMC lineups in March, including full-sized pickups -- smacked of desperation to some.

"It's panic mode," groused one Chevy dealer from the Northeast. "It reminds me of the original employee pricing campaign" from 2005.

It's unlikely that GM is digging quite that deeply into its pocket for its dual Truck Month and Open House promotions, which were described in a summary to dealers last week as an "unprecedented promotional assault." But the latest initiative, which includes the heaviest truck incentives since the redesigned Chevrolet Silverado and GMC Sierra pickups debuted eight months ago, suggests GM executives have seen their pickup market share fall far enough.

GM's promotion comes as it faces "an intense full-court press by its competitors Ford and Ram," Barclays Capital analyst Brian Johnson wrote in a research note last week. Johnson wrote that the hit from competitors' big discounts has resulted in "arguably the least successful large pickup launch over the last 15 years."

GM's combined market share for the Silverado and Sierra has been 33 percent or lower in four of the last five months, down from the typical 35 to 40 percent of recent years. Dealers have clamored for more aggressive discounts

"We need to get our market share back and get more of our trucks out there," said Martin NeSmith, who owns two Chevrolet-Buick-GMC dealerships in south Georgia.

Chevy's Truck Month promotion will run through March, offering the same price on 2014 light-duty and heavy-duty Silverados that GM offers to employees of its suppliers. Supplier pricing is the dealer invoice price plus the destination charge and a $150 program fee.

The truck promotion will be combined with Open House events at Chevy and Buick-GMC stores, offering supplier pricing, or less, on nearly all 2014 models.

GM executives have pointed to sharply higher transaction prices as proof that the pickup launch has been a success. Average transaction prices in recent months have run $4,000 to $5,000 higher than year-earlier prices on the prior-generation truck.

The supplier pricing offer will replace other deals, such as cash rebates and loyalty discounts, so the overall impact on GM's incentive costs remains unclear.

J.D. Power research shows that from Feb. 1 through Feb. 14 GM's incentives rose by less than 1 percent compared with the same period in January, to $3,598 per vehicle, despite a Presidents Day sale that ran throughout the month.

Some analysts don't see panic in GM's March promotion.

Citigroup Inc. analyst Itay Michaeli said that GM's retail transaction prices so far this year are more than $1,000 higher per vehicle than a year earlier, more than double the increase he expected.

"That means," he wrote, "GM has ample cushion to spend additional dollars in March to recapture share."